The Cabinet has given the go-ahead to the National Pharmaceutical Policy. In effect, this means that the prices of essential medicines will soften marginally.

A ministerial panel headed by Agriculture Minister Sharad Pawar had on Wednesday finalised the drug pricing formula based on simple average of drugs with over 1 per cent market share.

The Group of Ministers (GoM) had earlier decided on weighted average price of drugs with over 1 per cent. It may be noted that Finance Minister P Chidmabaram had reservations over weighted average price-based pricing formula. However, sources told NDTV that the Finance Minister is not happy with the current price mechanism as well.

The GoM had suggested that any change in formulations of 348 drugs will come under price net and an increase in prices beyond 10 per cent will have to be cleared by drug price regulator National Pharmaceutical Pricing Authority (NPAA), with NPAA being allowed to revise prices any time. NPPA can revise prices at any point

The Finance Minister was a special invitee at the GoM meet on Wednesday as there were concerns raised on following the weighted average price (WAP) method of pricing, with Mr Chidambaram suggesting that the cost plus method should be adopted.

Now, following approval by the Cabinet, 348 essential drugs will come under price control of the government.

At present, the government, through the National Pharmaceutical Pricing Authority (NPPA), controls prices of 74 bulk drugs and their formulations.

Apart from Pawar, Sharma and Jena, other members of the group of ministers include Health Minister Ghulam Nabi Azad, Minister for HRD, Communications and IT Kapil Sibal, Law Minister Salman Khurshid and Planning Commission Deputy Chairman Montek Singh Ahluwalia.